23. November 2009 by Dan Walkow, CFA, CMT.

 Something is persuading people to buy gold, driving the price to and past $1,100 per ounce, from about $270 at the beginning of this decade, and around $700 when the financial crisis first hit.This is not mere panic buying by a herd of small investors trying to benefit from what is called a momentum play. John Paulson (no relation to Hank), the investor who made $20 billion for his hedge fund between 2007 and 2009 by betting on a collapse of the financial and housing markets, is betting on gold in a big way. Paulson & Co already holds $3 billion in gold-related investments (including AngloGold Ashanti and Kinross Gold), and Paulson has just seeded a new gold-related fund with some $250m of his own funds. His modest objective: appreciation at a rate higher than the increase in the price of gold itself.

Serious money in the gold market these days read more at the TIMES here.

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19. November 2009 by Dan Walkow, CFA, CMT.

The health of most pension plans continues to improve as stock markets recover, but it will be a long time before plan members in private industry can rest easy.The blow of last year’s investment losses is forcing more employers to question their ability to continue paying the same level or type of pension benefits in future.

Meanwhile, pensioners at companies other than Nortel Networks Corp., AbitibiBowater Inc. and others in bankruptcy protection could see their payouts reduced.

Even with this years stellar stock market, rally private pension plans remain seriously underfunded and the risk of pension payout reductions  poses a serious risk for pre and near retirees.

If you are a member of a defined benefit plan (where the company funds the pension) or a defined contribution plan (where the company and you contribute funds) you should review the status of your plan as to its health and capacity to meet future pension obligations.

 If you are concerned that the plan is at risk then you should consider rolling over your pension plan, 401K to a IRA in the USA or a LIRA in Canada.

Read the full story here.

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16. November 2009 by Dan Walkow, CFA, CMT.

Canadian tax officials have also been cracking down on charities that use tax shelters. Those shelters have become big business in recent years, pulling in close to $1-billion in contributions in 2007. That represented nearly 12 per cent of all giving in Canada.

Many shelters operate on a so-called “buy low, donate high” basis. For example, some shelters used to buy massive amounts of artwork at a discount, have it appraised for a much higher amount and then donate the art to a charity. Participants in the shelter would receive a charitable tax receipt based on the appraisal value.

The Canada Revenue Agency (CRA) has been cracking down on these shelters, arguing they are tax dodges that serve no charitable purpose.

Last year, for example, the CRA shut down International Charity Association Network (ICAN), which issued more than $400-million worth of tax receipts in one year. CRA alleged ICAN was a tax shelter that provided inflated tax receipts to donors and offered few if any charitable services. Tax officials are now auditing more than 34,000 Canadians who participated in a related ICAN donation program.

Same old same old. Governments structure a tax incentive to encourage cash flow to a program or sector such as real estate investments, charities, oil and gas etcetera and usually sooner rather than later the “sharpies” come out of the woodwork.

It if sounds like it is too good to be true, it always is……

See full story here.

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15. November 2009 by Dan Walkow, CFA, CMT.

GOLD $5000+ 11/11/09

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15. November 2009 by Dan Walkow, CFA, CMT.

 Click here to go to live interactive map.

Moody’s at THE DISMAL SCIENTIST has a great interactive map which montiors the economic condition of economies around the world. There is a wealth of info on this site which not only provides a global perspective but you can drill down to a country or State.

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15. November 2009 by Dan Walkow, CFA, CMT.

You’re right not because others agree with you, but because your facts are right.

“I had two mentors: my dad, Howard Buffett, and Ben Graham. Here were these two guys who I revered and who over the years gave me tons of good advice. But when I think about what they said to me, the truth is, the first thing that comes to mind is bad advice.

“I was not quite 21 when this happened, in 1951, and just getting out of business school at Columbia. I had just taken Ben’s class there–and I was the most interested student you ever saw. I wanted to work for Ben at Graham-Newman Corp., and I had famously gone to him and offered to work for nothing. He said no.

“But I still was determined to go into the securities business, and that’s where Ben and my dad gave me the bad advice. They both thought it was a bad time to start. One thing on their minds was that the Dow Jones industrials had been above 200 all year, and yet there had never been a year when it didn’t sell below 200. So they both said, ‘You’ll do fine, but this is not a good time to start.’

“Now there’s one thing that may have influenced my dad, and maybe Ben too. I was so immature. I was not only young-looking, I was young-acting. I was skinny. My hair looked awful. Maybe their advice was their polite way of saying that before I started selling stocks, I needed to mature a little, or I wasn’t going to be successful. But they didn’t say that to me; they said the other. Anyway, I didn’t pay any attention. I went back to Omaha and started selling securities at my dad’s firm, Buffett Falk.

“My dad was a totally independent thinker. —Warren Buffet.

Several pearls of wisdom here –Read More.

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14. November 2009 by Dan Walkow, CFA, CMT.

Gold and silver receive special treatment in the tax code. Considered collectibles, not capital assets, they don’t qualify for the maximum 15% tax rate on long-term capital gains. Instead, gains on the sale of gold and silver investments, including gold- and silver-backed ETFs, and gold bullion and coins (except certain U.S.-issued coins), are taxed at a maximum rate of 28% when such investments have been held for more than a year. When these assets are held for less than one year, gains are taxed as ordinary income.

See more here on how Gold and Silver investments are taxed in the USA. Barrons by subscription. Click here.

Posted in Taxation, Precious Metals | No Comments »

11. November 2009 by Dan Walkow, CFA, CMT.

The municipal bond market’s message to California: Enough with the borrowing already!

Over the last seven weeks the state has sold more than $21 billion of short- and long-term debt for budget-related reasons and to finance voter-approved infrastructure projects.

That flood — in a period when muni bond yields nationwide already were rebounding after diving in summer — has helped to boost yields more than they might otherwise have risen, some analysts assert. More here at the LA TIMES.

The most recent muni bond offering this past Tuesday by California was priced to pay 4%  for a 4 year maturity, up from the prior offering a few weeks ago of  2.48%.

Not bad for a tax free investment. Worth a look!

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9. November 2009 by Dan Walkow, CFA, CMT.

Talk about long-term strategic planning! China is paying special attention to Africa. They are positioning for the next great consumer growth market after India.

China good will, financial support and investments in Africa garner access to vast raw materials, such as metals, energy and other materials on the one hand while at the same time building business ties to sell Chinese products to the growing African middle and upper class.

TIME has a piece that covers it well and supports the view that China is a strategic powerhouse out in front of most other countries. See it here.

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8. November 2009 by Dan Walkow, CFA, CMT.

There was a new tax break for corporations enacted for corporations in the USA this past Friday which extends the time a company can carry back its losses from two years to five years.

This works out to hundreds of millions of dollars courtesy of American tax payers.

Ironically enough some of the primary corporate beneficiaries are real estate companies who over built in the first place. I guess it is good to have friends in high places…

Read more here.

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